Australia will offer Pacific countries up to A$3 billion ($2.18 billion) in grants and cheap loans to build infrastructure, Prime Minister Scott Morrison said on Thursday, as Canberra seeks to counter China’s rising influence in the region. Australia and China have been vying for influence in sparsely populated Pacific island countries that control vast swathes of resource-rich oceans.
China has spent $1.3 billion on concessional loans and gifts since 2011 to become the Pacific’s second-largest donor after Australia, stoking concern in the West that several tiny nations could end up overburdened and in debt to Beijing.
“The government I have the privilege to lead, is returning the Pacific to where it should be; front and center,” Morrison said in a speech announcing the new Pacific initiative.
“This is our patch. This is our part of the world.” Morrison said Australia will create a A$2 billion infrastructure fund that will invest in telecommunications, energy, transport, water projects.
Australia will also give an additional A$1 billion to its financing arm, which offers loans to private companies unable to secure funds from traditional lenders, to invest in the Pacific.
Morrison said Australia would also expand its diplomatic presence in the Pacific, posting staff to Palau, the Marshall Islands, French Polynesia, Niue and the Cook Islands.
Australia said it will also strengthen defense and security ties with Pacific islands through new joint exercises and training.
While Morrison did not name China in his most detailed foreign policy speech since he become Australia’s sixth prime minister in the last decade in August, few were in doubt as to who the policy was aimed at combating.
“Australia is reacting to what China is doing. Australia needs more tools to engage with the Pacific,” said Jonathan Pryke, a Pacific Islands foreign policy expert with the Lowy Institute, an Australian think-tank.
Ties between Australia and China, its largest trading partner, have been strained since Australia accused China of meddling in its domestic affairs late last year.
“This announcement will be a gauge of whether Australia can improve relations with Beijing while doing things that would have previously annoyed China,” said Nick Bisley, professor of international relations at Melbourne’s La Trobe University. Australia’s Foreign Minister Marise Payne will on Thursday meet her Chinese counterpart in Beijing, the first visit by an Australian foreign minister in two years after bilateral relations soured.
Australia has in recent months earmarked the Pacific for infrastructure spending, driven by national security concerns, but it has been forced to raid its aid budget to fund projects.
In May, Australia said it would spend about A$200 million to develop an undersea internet cables to Papua New Guinea (PNG) and the Solomon Islands amid national security concerns about China’s Huawei Technologies Co Ltd [HWT.UL].
Earlier this month, Australia said it would help PNG develop a naval base, beating out China as a possible partner for the port development.
Diplomatic sources told Reuters Australia was worried the port could accommodate military vessels in strategically important waters.
Nigeria’s Borrowing Remains Relatively Low At 19% – Minister
Minister of Finance, Zainab Ahmed, has said Nigeria’s borrowing still stands at 19 per cent of the Gross Domestic Product (GDP). She said this level is low compared to debt levels in Ghana, Brazil, South Africa, Egypt and Angola.
The minister also said there is no plan to remove fuel subsidy. She said the International Monetary Fund merely advised the federal government to remove fuel subsidy but assured Nigerians fuel subsidy removal plans are not even being considered at this time.
On the question of the country’s debt level, the minister said Nigeria’s borrowing is still at 19 per cent of GDP. She said this is still within the country’s fiscal responsibility act which allows a maximum of 25 per cent of GDP.
The minister said Nigeria has the lowest level of borrowing compared to other countries.
Inflation Nightmare Returns To Haunt Zimbabwe
The price of bread almost doubled for Zimbabweans last week, as the inflation nightmare that marked the rule of long-time authoritarian leader, Robert Mugabe, returns to haunt his successor, Emmerson Mnangagwa.
There have been warnings of the mental and physical toll the rampant price increases will have on Zimbabweans after the cost of a loaf of bread basically doubled to three and a half dollars, and a tub of butter shot up to $17 from eight fifty.
Mnangagwa pledged to revive his country’s moribund economy when Mugabe was toppled in 2017 after 37 years in power.
But after the central bank unveiled a new monetary policy in February, introducing a new local currency, prices of goods and services have skyrocketed at rates unseen in a decade.
The disparity between the official and parallel market exchange rates has been rapidly widening, triggering price hikes of up to 300 percent.
The chief of the Zimbabweauthoritarian leader, Robert Mugabe, says he is angry at the government for “putting on a brave face and giving the impression that the economy is on a rebound, but on the ground things are going in the opposite direction.”
The crisis has brought back memories of a decade ago when hyperinflation peaked at a grotesque 500 billion percent, wiping out the Zimbabwean dollar.
Inflation Rate Jumps To Almost 67% In Zimbabwe
Zimbabwe’s statistics agency, said on Monday, year-on-year inflation rate, for March, has spiked, to almost sixty-seven percent under, the new base used to calculate the consumer price index. The agency noted that under the old basing system it used until February this year, the rate had shot up to a hundred sixty-six percent, confirming that Zimbabwe was already in a hyper-inflation environment.
An economist, Steve Hankie, posted on twitter that the actual inflation rate was more than 200%. He said this is the second highest annual inflation rate in the world.
Another economist, Kipson Gundani, says the current inflation figures were emanating from confidence deficit bedeviling the economy.
This new inflation rate may not be a shock to Zimbabwean. In 2008, the country’s inflation reached 500 billion percent, rendering the local currency worthless and eroding savings and pensions.
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